The Volkswagen of Spas

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4 H 708 AqBack in the early days, when spa manufacturing was a garage-based operation, a spa was a spa, and the cheapest spa was usually the market leader. Capital investment was minimal, and if an entrepreneur could figure out a way to sell for $100 less and still make a profit, the company's future was assured.

In time, as companies grew they tried to differentiate themselves by making spas more elaborate. Acrylic became the industry standard shell material, and each new generation of spas was equipped with more jets, bigger pumps and new accessories.

The price went up in commensuration, of course, until it became common practice to finance a premium spa with a second mortgage.

But some people don't like hot water that much. They like it, just not that much.

For these people, the roto-molded spa has been a delightful development. It's a chance to own a new spa, to sit in hot, bubbly water at a price they can work into a middle-class budget.

"What we've found," says Erik Mueller, president/owner, Watson's of Cincinnati, "is that it's a nice product for the customer that doesn't have a lot of discretionary cash in their budget but would like to get some hot water in their backyard and enjoy a spa - or the people who are living in condos or apartments and have a little patio out back, but don't have the space for the big spa."

"What it's really allowed us to do," adds Bruce Rothschild, manager, Your Backyard Superstore, Melbourne, Fla., "is be seen by more people. Because we carry Hot Springs and Jacuzzi . . . a lot of high-end stuff. But we sometimes lost customers because we didn't have product that really fits their price range.

"These spas make sense," he says, using an automobile analogy, "because a lot more people buy Hyundai than Mercedes."

The product works as part of an overall strategy for Rothschild. It allows his dealership to begin a conversation with these customers - people who, before, might have said, "I can't pay $8,000 for hot water, and that's that."

"They'd come in and get a couple prices and then just walk out," he says. "But what this has allowed us to do is, both on the phone and in person, be able to tell people we have spas starting at $2,400."

In simple terms, it has allowed his salespeople to spend more time with people interested in hot tubs, regardless of income level. "And then, because they're spending more time with us, building more rapport, we're able to find out what they want, what they need.

"It gives that lower-end customer confidence to buy from you," Rothschild says, "because you go from, 'Oh, you carry that expensive stuff I can't afford right now' to 'Gee, I'm going to get this great service that Your Backyard Superstore is known for without spending $8,000 to $10,000.'"

The Upsell

The nuances of the sales approach are important here, he says; the lower-priced, roto-molded spas have to be treated with respect. "It's important how you handle it with the customer," he says. "You can't treat it as the ugly stepchild, saying, 'Oh you don't want that, let's go look at real spas.'"

The idea is that once they've purchased a spa from the dealership, it's the beginning of a lifetime relationship in which the retailer intends to be selling - and buying - for some time.

"We have a very active trade-up program for all of our spas," says Rothschild. "Within the first year of their purchase of a Dream Maker, customers can trade in for a Hot Springs or Jacuzzi, and they get 100 percent of what they paid for their Dream Maker spa. In year two and three it goes down to 75 and 50 percent.

"Then we sell the spas we've bought back from them used, at a discount. And we actively pursue that business - a good 15 to 20 percent of our customers decide to do it. It allows them to actually pull the trigger on a spa purchase quickly and easily, and then know that if they later decide they want something more elaborate, they won't be penalized.

"And we're happy because we're moving them into a higher-end product and it gives us really happy customers."

Mueller has seen that same phenomenon at Watson's, but taking on a product in a lower price range initially forced the company to rethink its sales approach. "We thought we pretty much had the bases covered," he says, "and that we didn't need to address that product. It was always our feeling that we were converting those [lower-end market] customers to one of the [higher-end] products that we have."

After trying the roto-molded product, however, Mueller says "we found that there's quite of bit of business out there that maybe we were not addressing - people that were looking for plug-and-play technology where they could just take that sucker home themselves."

The Simple Life

Simplicity is indeed the key to the low price and success of the product. It's simpler to make, and simpler to sell, deliver and install.

The equipment is basic and sturdy, with components from Aqua-Flo, Waterway, and Balboa, notes Bill Odell, sales manager, South Pacific Spas, Adelanto, Calif. "It's all industry-recognized stuff, the same kind of equipment that everybody else uses for the most part."

There aren't as many jets compared to the premium spas, nor is the pump as big, but what keeps the manufacturing cost down is the high-density polyethylene (plastic) roto-molded shell, and it's one-piece, machine construction. Whereas a typical premium spa structure requires a fair amount of labor and framing, when the plastic spa pops out of the mold, it's almost ready for plumbing.

"The roto-molding process itself takes away a lot of the labor that goes into manufacturing an acrylic spa," says Bob Gawlik, vice president and general manager, FreeFlow Portable Spas, Ontario, Calif. "When you're building an acrylic spa, a machine forms the acrylic shell, but now you've got to put on your two-by-fours, your siding and everything else. But when you roto-mold a shell, the structure is already there - the sides are there, the tub is there, all we're putting in is tubing and components, and that makes everything very simple."

The roto-molding process has been around for decades, explains Johnson. "It's very labor intensive to fiberglass a spa, but these come out of a machine. At a factory, they can spit out 100 spas a day. The process is used to make many items like playground slides, trash cans, bins and car bumpers. The material is lightweight and indestructible. Think of the Big Wheel you had as a kid. You grew up and went to college and your Big Wheel was still in the garage. You can't destroy it."

This "simple and robust" theme extends to delivery and installation, where tremendous ease of handling encourages some customers to simply haul the spa home in the bed of a pickup.

Typically the dealership sends a truck with a crew of at least two, but at 200 pounds, as opposed to perhaps 800 for some premium spas, it's possible to handle the tub using one strong delivery person and a dolly. And with an electrical plug that goes straight into a standard 120-volt wall outlet, a significant amount of site prep time and money is saved over larger spas.

"You just unwrap the thing, put it out there and you plug it in," says Mueller.

Value For Money

It's not the first time somebody's tried to make a more affordable spa. In general, however, attempts to produce a trustworthy spa in this niche have met with little success.

Vinyl shells have been tried, although like other "economically friendly" spas, they suffered from complaints about the reliability of the equipment.

Mueller is less diplomatic. "Historically," he says, "when we've played around in these price ranges, it's been junk. But considering the price of this product, and the quality of equipment, jets and so forth, that goes into the spa, it's an excellent value.

"I am always talking to the top three or four spa manufacturers, telling them, 'Hey, this industry is never going to go anywhere until you figure out how to make a spa affordable at $3,999 or $4,500, because the typical potential customer just doesn't have the money to spend eight grand on a spa.'"

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